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neezers
New Member

Can we use the cost of building a new home to defer the capital gains on the sale of our long term home?

We sold our long term home in June 2018 and took the money and started to build our new home right away.  Is this not the same as rolling over capital gains from our home to another?

3 Replies
Carl
Level 15

Can we use the cost of building a new home to defer the capital gains on the sale of our long term home?

No. That deferment option expired over 10 years ago.
JulieR
New Member

Can we use the cost of building a new home to defer the capital gains on the sale of our long term home?

No. The system of deferring gain on the sale of a primary residence was repealed in 1997.  The law now allows the exclusion of gain rather than the deferral of gain. See Home Sale Exclusion of Gain for more information about the rules that apply to selling your home.

Opus 17
Level 15

Can we use the cost of building a new home to defer the capital gains on the sale of our long term home?

Each transaction is treated separately.

If you lived in your previous home for at least 2 years of the last 5 years and owned it for at least those two years, you can exclude the first $250,000 of gain (or $500,000 if married filing jointly) and only pay capital gains tax on the gain over the exclusion limit.  (Additional special rules apply if you ever used the home as a rental or took the home office deduction.)

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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